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WBS1! trade ideas

Closing CL Long idea early under the down trend line. The CL daily time frame has an up Fibonacci with an extension price point 78.92 about +451 ticks above the market. However the market is near the daily down trend line which could push the market back down. The last three times the market was pushed bearish, the market closed with a long wick towards the north. It will be a good idea to close the current long idea and wait for the market to break and close above the down trend line or to pull back giving a lower price before looking for a new long idea. Entry: Counter trend line break bullish in the buy zone. STOP: 64.60 LIMIT: 78.92
NYMEX:CL1!
by JoshuaMartinez
4
Crude Opportunity Part 2In this second part, the Crude Futures Daily chart is used. In this chart, there are marked points where the SuperTrend Buy signal is triggered and is coincided by a green Rate of VolDiv (RoVD, bottom panel). There is one on 8 October but there was no comcomitant indication and clearly it "failed". The others that fulfilled the condition are marked with a yellow time line. So clearly, the recent breakout is projected to have something similar in terms of a bullish rally. This is in line with the weekly outlook. Together with technical indicators like the RoVD, as well as the MACD where there is a clear breakout support, Crude appears to have much upside potential. However, there is no rush as it just met the trendline resistance and is expected to pull back a bit to retest and breakout again for the longer term. Overall, this looks not like a spike out of fear, but one spurred by inflation. This is in the MUST WATCH list for sure and an accumulation plan should be in place. A projected path is drawn as a guide and the target for Crude is 100-105.
NYMEX:CL1!Long
by Auguraltrader
Bullish on Crude Oil: Targeting Higher Prices Next Week - Key Insights: Crude oil is showing bullish momentum with strong market sentiment favoring long positions. Key support levels are around $73 and $72, while resistance levels are at $74.26 and $75.53. Recent trends indicate that the energy sector is outperforming others, driven by rising oil prices and investment optimism. - Price Targets: - Next week targets: T1 = $75.53, T2 = $78.46 - Stop levels: S1 = $71.50, S2 = $70.00 - Recent Performance: The price of crude oil has recently been hovering around $73.68, with upward momentum evident in tight consolidation patterns. The energy sector as a whole has increased by 3.4% to 5.4%, outperforming other industries. - Expert Analysis: Analysts are cautiously optimistic about the crude oil market, with a focus on price levels that suggest potential support at $72 and $71.50. The prevailing sentiment encourages long positions as the market positions itself for possible price increases. - News Impact: Geopolitical tensions involving oil supply, particularly from Russia and Ukraine, are intensifying concerns over supply disruptions. Furthermore, potential tariffs on oil imports from Canada and Mexico could disrupt market stability and increase price volatility. The upcoming developments in energy policy will further shape the market dynamics in 2025.
NYMEX:CL1!Long
by CrowdWisdomTrading
Crude Opportunity Part 1Previously, heads up about BTCUSD and it was pretty spot-on. Oddly enough, CRUDE OIL CL1! is next. For the first part, here we look at the marked time lines, and the effect after these time lines. 5 of the last 6 times, saw a bullish rally. Of these, 4 of the 5 occasions had the Rate of VolDiv (custom indicator) trend changed for an uptick. In essence, the current weekly Crude Oil Futures CL1! show a similar set up ready for a spike and rally for Crude Oil. No fundamental reason (yet) but the technicals are projecting a billish scenario based on the technical set up. Part 2 will look more in-depth and zoom into the recent time frame... Stay tuned if you are keen...
NYMEX:CL1!Long
by Auguraltrader
Can the HOUSE Capitalize LONG this week on Crude OIL...?NYMEX:MCL1! "In order to be successful in life you have to learn how to do something so well that the dead, the living, or the unborn could not to do any better." -Dr. MLK Jr. Here on the 4Hr TF market opened up and we are currently inside of the HTF Daily Supply Zone ($73.43). Now this is my "Confluence Profile 500K" Playbook System to go LONG; Pillar 1) HTF EOF 'Market Direction' Who has the stronger more dominant hand? Now everyone's perception is different and that is totally fine. In my personal opinion we are still Pro Trend Bearish, however currently buyers have the slight EDGE. Now Im going to wait see how price reacts with the 4HR Sub. ($73.75) and wait to see if we can get a LTF Order Flow Footprint confirmation to enter LONG and Target the HIGHS.... Pillar 2) HTF Mitigation leads to LTF Order Flow Entry Confirmation. Let's be more patient and wait for more Data to be printed and then we'll create a better narrative to enter. I'll keep close update as PA develops. Til then before I head off, family I have to say; NOTHING and I repeat NOTHING in the market is set in stone. We play probability & adaptability to market conditions. Let's be skilled. Let's be patient. Let's be focused. Developing a stronger system that performs exceedingly well over time. Continued Success to you all... Remember; "Our Profession is to Manage the downside costs of printing HIGHSIDE returns of $$$ consistently. Done correctly, well Abundance awaits us." -500KTrey
NYMEX:MCL1!Long
by TreyHighPwr
#202501 - priceactiontds - weekly update - wti crude oil futuresGood Evening and I hope you are well. tl;dr wti crude oil futures: Bullish until bears come around. Big bull surprise to start 2025 with strong follow through above 72. Market has still a bit room to the bear trend line, that started in 2024-04, around 75. I can’t see this breaking above 77.38 and I have my doubts about a break of the trend line, so longs are no option for me here. I want to see selling pressure next week and wait for decent second signal before shorting this. comment: Big bull surprise early in 2025. I did not expect the market to just melt through 3 months of lower highs. We now have the big bear trend line right above us around 75 and it’s reasonable to expect market to get there before we could see bigger profit taking. Any short would need a stop 77.4 but I still think the odds are very good for the bears that we won’t make a higher high. Volume is still garbage so once we have decent selling pressure, I will take that swing short. current market cycle: trading range key levels: 70 - 75 bull case: Bulls want 75 and a retest of the bear trend line. Easy as that. They could overshoot it some but market has respected it two times before so I expect the trend line to hold. Volume is atrocious so it’s possible that the market just melts lower over the next 1-2 weeks after the retest. It would be very strong by the bulls if they keep the market above 70 now. Invalidation is below 70. bear case: Bears have nothing for now but since we have made lower highs since 2023-09, they expect this to be one as well and the closer they can short to 77 the better. It’s too early to short and bears need to build much bigger selling pressure. We will probably have to go sideways first before this can come down again. Invalidation is above 77.4. short term: Bullish until bears come around. Longing pullbacks is decent until we make lower lows again. Every touch of the 2h 20ema was bought, so keep looking for longs close to it. medium-long term - Update from 2025-01-02: Still no better medium-long term outlook to write about. The triangle has been going on for so long, it’s highly unlikely that we will break above it. current swing trade: None chart update: Nothing
NYMEX:MCL1!Long
by priceactiontds
Possible strong trend change in oilOil is at a critical chart crossroads with the Light Crude Oil contract flirting with an upward break of the strong long-term downtrend line “K” that has been passing through the $73 area in the last two sessions. On Friday morning when the article was written, the contract was trading at $72.90. A possible now confirmed upward break of this line will make it difficult for the contract’s sellers as it will have the power to open the way to $76. Above that, the price of $80 per barrel will “flash”. On the other hand, however, the apparent inability of oil to pass above $73 and the “K” will mark a third consecutive exhaustion peak, pushing the contract back below $69. It is of course best not to attempt to push oil prices above $76 because it will begin to "undo" the positive scenario of further weakening inflation.
NYMEX:CL1!Long
by manthos
The Scorebook: 2024 Commodities PerformanceQuestion: What was the best performing commodity in 2024? For many of us, the first coming to mind would be Gold. Indeed, gold had a spectacular year driven by geopolitical uncertainty and the central bank reserve buildup. Spot gold hit an all-time-high of $2,788.54 per ounce on October 30, 2024. However, Gold retreated nearly $200 since due to the diminishing rate-cut prospects. It ends the year at 2606.72, up 28%. Gold has not won the 2024 commodity championship. • The performance of Precious Metal commodities was mixed. Silver had an annual return of 24.8%, but Platinum was down 4.4%. • Base Metals were weak overall, with Aluminum gaining 9.6% and Copper up just 3.8%. Crude Oil was in the spotlight all year long. The ongoing war in the Middle East, a major oil producing region, should have pushed oil prices sky high. On the contrary, WTI spot price closed at $72 per barrel at year end, practically flat for the year. • The fighting sides of the conflict, Israel, Hamas, Lebanon, Syria, and the Houthis, was not oil producing nations. OPEC+ countries continue to supply the global market without interruption. NYMEX WTI futures price (CL) was up just 5.1% in 2024. • Other Crude and Refined commodities were worse. Weaker demand pushed RBOB Gasoline down 2.0%, while heating oil lost 6.8%. On the bright side, the natural gas product suite was a totally different ball game. Unprecedented weather events result in significant supply and demand shocks, and pump huge volatility in the Nat Gas market. NYMEX Henry Hub Natural Gas Futures hit a 52-week high of $4.20 on December 30th, after a leading weather forecaster came out predicting record-breaking winter storms in the heavily populated Great Plains and Mid-South regions. • As the storms are still developing, Henry Hub ended the year at $4.01, up 41.2%. Across the Atlantic Ocean, Europe adapts to clean energy more rapidly than the U.S. It is estimated that up to 44% of the electricity in the EU is produced by renewable energy. This heavy reliance could create huge problems if the weather does not cooperate. When Germany ran into days with no wind and a clouded sky, its electricity supply dropped by half. This huge supply gap prompted energy companies to turn on gas-fueled backup plants, pushing Nat Gas prices to a record high. • Dutch Nat Gas contract TTF was up 62.3% in 2024. For Agricultural commodities, Grains and Oilseeds were losing ground. • Corn was up 3.1%, while Soybean and Wheat down 22.3% and 11.8%, respectively. The Meat Department fares much better. Consistent with our grocery shopping experience with ever pricier red meat, Live Cattle went up 23.7%, while Lean Hog gained 12.9% in 2024. Overall, Natural Gas was the reigning King of Commodity in 2024, with Henry Hub up 42% and the Dutch TTF gaining 62%. But wait, if Eggs are tradable, you could book even higher profits. According to the USDA price bulletin, Grade A Large Eggs are now selling at $4.90 a dozen on average nationwide, up 359% from $1.06 a year ago! It’s a pity that CME Egg futures had been delisted since 1981, depriving us a huge trading opportunity. Do you know that the Chicago Mercantile Exchange was originally named Chicago Egg and Butter Board in 1919? If you have access to China’s futures markets, you could still trade Egg Futures from Dalian Commodity Exchange. The JD contract traded 248,533 contracts last Friday. Happy Trading. Disclaimer: The above discussion is my personal view, and not a trading advice.
NYMEX:CL1!Long
by JimHuangChicago
4
Confluence Profile 500K (Order Flow Footprint + PA) 2.5RNYMEX:CL1! "If you can't fly then run, if you can't run then walk. If you can't walk, then crawl. But whatever you do you have to keep moving forward." -Dr. Martin Luther King Jr. Family I hope everyone is in good spirits as we kick off this new year of 2025!!!! Here in this video I have went into gr8 detail on this trade that I took SHORT todays during NY Session on Crude OIL and I broke down the Order Flow Footprint along with PA on why I decided to enter the trade and capitalize on 2.5R. My original target was 5R however volume died out and I decided to close and walk with profit. This year I'm going to consistently Over N over N over N over N over again study the 10pt Stop entry here on Crude Oil. On overage Crude Oil will run for +120pts during NY Session. All we need is half of that to eat. (60pts) this is my sweet spot. I'm determined to master it. Added along with better tape reading of the Order Flow Footprint. Let's stay active! Remember; "Our Profession is to Manage the downside costs of printing HIGHSIDE returns of $$$ consistently. Done correctly, well Abundance awaits us." -500KTrey
NYMEX:MCL1!Education
by TreyHighPwr
Oil Price Stages Five-Day Rally for First Time Since OctoberThe price of oil trades near the weekly high ($73.73) as it stages a five-day rally for the first time since October. Crude Oil Price Outlook Keep in mind, the price of oil cleared the November high ($72.39) as it carved a series of higher highs and lows, with a break/close above the $73.00 (61.8% Fibonacci retracement) to $74.00 (50% Fibonacci retracement) zone opening up $76.80 (23.6% Fibonacci retracement). Next area of interest comes in around the October high ($77.38) and a further advance in the price of oil may push the Relative Strength Index (RSI) into overbought territory for the first time since April 2024. However, the RSI may hold below 70 as crude struggles to extend the bullish price series, and lack of momentum to break/close above the $73.00 (61.8% Fibonacci retracement) to $74.00 (50% Fibonacci retracement) zone may push the price of oil back towards $71.70 (61.8% Fibonacci retracement). --- Written by David Song, Senior Strategist at FOREX.com
NYMEX:CL1!
by FOREXcom
'Confluence Profile 500K' (Order Flow Footprint + PA)"10pt STOP"NYMEX:CL1! "Successful trading has always been about understand the convictions, the strength and the weakness of buyers and sellers. Once you understand what the other traders are doing in the market, you can successfully trade with them." -Michael Valtos Family in this video I went into a gr8 in depth breakdown of a 5-6R trade that took place today during NY session SHORT on Crude OIL. Paying very close attention to the order flow footprint all the while observing very closely how PA is setting up will help us to develop the mastery of the 'Confluence Profile 500K' (Order Flow Footprint + PA) "10pt STOP". Just think about this...... December of 2024 price moved on average of 120pts during NY session. (5am-2pm) PST. -We know we're not going to catch the whole 120pts so were going to focus our attention on cutting that point ratio in half and catch 50-60pts with a 10Pt STOP.... -Granting us 5-6R in our Favor!! Now this is the RISK we face, WE HAVE ONLY 10PTS of pre-determined RISK. So, the 'Confluence Profile 500K' will consist of the (Order Flow Footprint + PA) to give us the highest probability ratio of entering a position with only 10pts to RISK & this is our journey to Master the 10pt STOP w/ a 50-60pt Target!!! Let's go 2 work. Remember; "Our Profession is to Manage the downside costs of printing HIGHSIDE returns of $$$ consistently. Done correctly, well Abundance awaits us." -500KTrey
NYMEX:MCL1!Education
by TreyHighPwr
2025-01-02 - priceactiontds - daily update - wti crude oilGood Evening and I hope you are well. tl;dr oil - Neutral. 4th consecutive bull bar on the daily chart and it’s the biggest of the 4. We are close to a bear trend line from the triangle (depending on how you want to draw it) and I rather think this is the climactic end of the rally for now and we pull back more. I can be totally wrong and market breaks above the trend line to retest the August high above 76 but trend lines are support/resistance until broken. Neutral because I think it’s too high to buy and too early to short. The close above 73 was really strong though. comment: Bulls with a strong break above the November high and they closed above 73. We are now in a dead zone between 72.35 and 74 (or the area around the bear trend line). We could see a bigger pull-back down to 72 or 71 before we test the bear trend line. Longs in the dead zone are bad trades, no matter how you put it. I do think the breakout is strong enough to wait for pull-backs and go long then. current market cycle: trading range key levels: 71 - 74 bull case: Bulls have all the arguments on their side now but buying this close to the bear trend line is probably unwise. Many bulls will probably want to see a decent pull-back and form a better channel up. Any pull-back should stay above 70/71 though or more could see it as a bull trap like all other highs above 72 were for 3 months now. Invalidation is below 71. bear case: Bears had to give up once market continued above 72.35. Can they hold short and scale in higher with a stop 78? Not really. They will never reach even 1x their risk, so we will probably have to wait and see where the interest in buying vanishes and market stalls. Bears want to start shorting as close to the bear trend line as possible and if we just use the July & October highs, we could go up to 75. Bears really don’t have much here. Best they can hope for is to stall the market below 75 and wait for more bulls to take profits. Invalidation is above 74. short term: Bullish. Buying near the 2h 20ema or most recent bull trend line is reasonable. Targets above are 74 and maybe 75. I will wait for a better pull-back to buy. medium-long term - Update from 2025-01-02: Still no better medium-long term outlook to write about. The triangle has been going on for so long, it’s highly unlikely that we will break above it. current swing trade: Nope trade of the day: Long since 10 a.m. CET. Strong 1h bull bar closing at the high tick and immediate follow through. Market never looked back.
NYMEX:MCL1!Long
by priceactiontds
Oil (UCO) - Short Term Bull - Swing Trade AMEX:UCO NYMEX:CL1! Here's the details of my trade Long on Oil (CL1!) - Position in UCO.... Daily Chart: - Falling Wedge Pattern - Break of Resistance Line Dec 11th - Retest of Resistance Line 3x - Inverted Head and Shoulders Formation - Break above Inv H&S Neckline Fundamental Support: - TBH, for oil I rely 90% on the chart formations. Fundamental data for oil fluctuates nearly everyday, and can be difficult to pinpoint any reliable correlation between fundamental data and news to price movements - However, major news/fundamentals are considered...OPEC announcements, wars and possible supply disruptions, etc - For this trade, I'm solely looking at the chart and will mention in the comments if any fundamental data impacts the trade Economic Data & News - Much news about China's economic stimulus and whether it will drive demand is still in debate. Recent news shows China's GDP will be 4.9% for 2024 and similar growth is expected in 2025. However, there's still a need for more time and data to truly see the impacts - Trump's tariffs are in question as to what and if he will implement them and what impacts it will have on the US and other major countries. For this trade this is not relevant, but more information keeping on top of. Target: - Entry $69.50 CL1! - Inverted Head and Shoulders - Head $68.50 - Neckline $70.50 - Target 72.50 - Stop: A break back below $69.50 - Inv Head and Shoulders formation is 8 Days - Estimated time of breakout move is 2/3 formation time therefore ~5 days to target Risks: - Low trading volumes during the holiday period do not support the transition to bullishness for oil - Supply/Demand news that could have a negative impact on oil prices - Economic data coming from China that stimulus is not working and growth is continuing to slow - Failure to hold above the Inverted H&S neckline Overall: Oil is not my favorite asset to trade due to fluctuating news releases and the difficulty of interpreting the supply and demand. However, the breakout of both a falling wedge and inverted head and shoulders are both high win % patterns...74% and 89% respectively, that I have taken a small position in my portfolio because the opportunity is there and it challenges my trading and depth of knowledge in oil. My Position: 1 Call Option in UCO (2x Ultra Bloomberg Crude Oil) $25 Strike, Current Price $27.55 Expiration Friday Jan 10th Average Price is $1.65 a contract Investment $165 Target $2.65-$4.65 (1-3:1 Profit Loss Ratio) Stop .80 Potential Loss -$85 Potential Gain $100-$300
NYMEX:CL1!Long
by jaytmarquardt
Crude Oil January Futures: Bullish Option Trade SetupBuilding upon my prior analysis, where I held a bearish outlook on Crude Oil January Futures , I now present a contrasting bullish perspective. While I had previously emphasized the confidentiality of the stop-loss level for short trades, this setup focuses on a call option strategy aligned with my expectations of upward momentum in the market. For this trade, I have chosen the 6000 strike call option . The optimal entry point for this position is below ₹234.20 , providing a favorable risk-reward ratio. As of this writing, the current market quote (best offer) stands at ₹186.00 , offering an attractive entry opportunity for bullish traders. My target for this position is set at ₹468.40 , which I anticipate achieving by the contract's expiry on 15th January 2025. Key Notes: This trade is based on my personal analysis and market perspective. It is important to emphasize that this is not a trade recommendation for the public. The stop-loss level remains confidential and forms an integral part of my risk management approach. Disclaimer: Trading in options and futures involves significant risk and may not be suitable for all investors. This analysis is solely my personal view and is shared for informational purposes. Perform your own due diligence or consult with a financial advisor before making any trading decisions.
MCX:CRUDEOIL1!Long
by IndexAce
HTF Daily Range EQ Level $71.75, Should we start to look SHORT?NYMEX:CL1! "Successful trading has always been about understand the convictions, the strength and the weakness of buyers and sellers. Once you understand what the other traders are doing in the market, you can successfully trade with them." -Michael Valtos Lets pay very close attn. to CRUDE OIL . As price is nearing HTF Daily Consolidation EQ Level $71.75 Per Barrel. We have to pay very close attn. to the ORDER FLOW Footprint to make sure we are in favor. I'm not 100% SHORT from the EQ Level $71.75 due to we have a Un-Mitigated Daily Supply Zone above. As I mentioned before we'll watch the O/F FP to make our best call for entry. I'll keep post as PA develops. Remember; "Our Profession is to Manage the downside costs of printing HIGHSIDE returns of $$$ consistently. Done correctly, well Abundance awaits us." -500KTrey
NYMEX:MCL1!
by TreyHighPwr
Crude Oil Eating Up Time - Plate almost emptyPrice bounced many times at the Green Support-Zone. It's the same level where the Huge Pendulums Fork Center-Line is (white-dashed). Next, we have the Yellow Fork. Price traded outside the L-MLH, bounced a couple times at the Support-Zone and eat up time. But now, I think the "Plate" is almost empty. Why? Price arrived at a decision point, a confluence point. This confluence point is where the Warning-Line and Price intersect. To me, a Long Trade is more likely than a Short. - world wide tensions - so many bounces at the Support-Zone, they won't let price go down much - price has not re-tested the L-MLH of the Yellow Pitchfork As this is a very long term play, it's obvious that this Chart/Idea would serve to build a position, rather than using it as a simple trade.
NYMEX:CL1!Long
by Tr8dingN3rd
Trading Plan: WTI Crude OilBased on my proprietary indicators, I maintain a bearish view on WTI Crude Oil. I am anticipating a downside target of ₹5800 (target open until 15th January 2025). Current Position: Holding short positions in MCX Crude Oil January 2025 expiry futures from ₹6025 levels. Intend to add more shorts if prices move to higher levels. Risk Management: Stop-loss and risk parameters are carefully planned but not disclosed here for strategic reasons. Position sizing is aligned with my overall risk appetite and trading capital. Disclaimer: This trading plan represents my personal views and trading decisions and is shared for informational purposes only. Trading in crude oil futures involves significant risk and may not be suitable for all investors. Readers should not consider this as financial advice and must conduct their own research or consult with a certified financial advisor before making any trading or investment decisions. Past performance of proprietary indicators is not indicative of future results.
MCX:CRUDEOIL1!Short
by IndexAce
Crude Oil Price Set for a Pullback - Consider Short Positions Ne Key Insights: Crude Oil prices have been under pressure recently due to oversupply concerns amid a slowdown in global demand. Geopolitical tensions, particularly in major oil-producing regions, are also creating uncertainty. Current market sentiment tends to lean bearish as economic indicators suggest weakening growth, especially in key markets like China. Traders should be cautious for potential further declines in price as recent patterns indicate a possible reversal. - Price Targets: For short positions, I suggest targeting the following: T1 = 66.50, T2 = 64.00 with stop levels at S1 = 71.50 and S2 = 72.00. This setup reflects a bearish outlook, allowing for a strategic entry while providing ample risk management. - Recent Performance: Crude Oil has experienced a notable decline, with prices falling from recent highs. The current price around 70.65 reflects a significant support level being tested. A continuing downtrend emerged after a brief period of consolidation, suggesting further downside potential. - Expert Analysis: Experts generally believe that Crude Oil faces substantial headwinds. Analysts cite that rising inventories and a lack of significant OPEC+ intervention may exacerbate downward pressure. Market sentiment is largely bearish, with traders expecting more volatility as economic data releases unfold. - News Impact: Recent reports indicate increased production from the U.S. shale sector is contributing to the oversupply scenario. Additionally, investor sentiment has been affected by mixed signals from central banks regarding interest rates, which could impact economic growth and consequently oil demand. Keep an eye on upcoming economic reports and geopolitical developments as they may influence short-term movements in the market.
NYMEX:CL1!Short
by CrowdWisdomTrading
Supply Glut to Weigh Down on WTI Crude Prices in 2025Outlook for crude oil prices in 2025 is a complex interplay of various factors. China’s fiscal & monetary policies, Trump’s energy agenda, OPEC+ strategies, and geopolitical developments will collectively sway oil prices. For now, the outlook for 2025 remains bearish. Analysts expect persistent oversupply, driven by rising non-OPEC+ production. Demand growth will remain tepid. T RUMP’S PRO-OIL STANCE TO DRIVE PRICES LOWER Trump’s pro-oil stance is expected to pressure oil prices by increasing US energy production in an already oversupplied market. In his victory speech, Trump vowed to halve energy costs by maximizing domestic US production, calling its reserves “liquid gold.” His plans include expanding drilling on federal lands, easing lease access, and fast-tracking energy infrastructure. In 2023, federal lands accounted for 26% of US oil output. Exploration & production slowed under the Biden administration due to reduced lease sales, higher royalties, and bond requirements. Source: Visual Capitalist & U.S. Department of the Interior – Bureau of Land Management During Trump’s first term, federal land lease issuances averaged 1.62 million acres annually compared to 138k acres under Biden, marking a whopping 91% drop. Trump’s first term saw US oil output rise by a record 3 million bpd, the largest increase under any administration. A second Trump term and a “Drill, Baby, Drill” mantra is expected to boost oil production. US producers require an average oil price of USD 64 a barrel for profitable drilling as per the Dallas Fed Energy Survey . However, reduced regulation, streamlined approvals, tax incentives, & potential reversals of Biden-era policies could lower production costs & encourage more drilling. TRUMP’S TRADE & GEOPOLITICAL POLICIES TO WEIGH DOWN ON OIL PRICES Escalating trade friction risks remain high, as Trump’s tariffs warnings on imports from Mexico, Canada, & China have fuelled uncertainty in global trade. Retaliatory measures, like those seen during 2018, could resurface. Rising supply and shrinking demand will press prices lower. For example, Chinese buyers shunned US crude due to tariff risks, widening the WTI-Brent discount from USD 3/b to over USD 11/b. However, with China’s share of US crude exports dropping from 25% in early 2018 to 7% in June 2024, spread divergence will be less pronounced. Source: ING Research Trump promises to swiftly end the Ukraine-Russia war and reduce tensions in the Middle East. For now, the specifics remain unclear. Success in easing geopolitical risks will significantly reduce the oil market’s “war-risk” premium, potentially driving prices even lower. Conversely, Trump’s staunch support for Israel and a hawkish stance on Iran may exacerbate tensions in the Middle East. In his first term, he re-imposed sanctions in 2018 that led to a sharp drop in Iranian oil exports. Under Biden, these sanctions remained but were loosely enforced, allowing Iran to boost output to 3.4m bpd from 2.5m bpd in early 2023. Trump’s return could bring stricter enforcement against Iran, potentially removing 1m bpd from the market. However, with most Iranian exports now directed to China, disrupting these flows may prove challenging. ING analysts expect Iranian supply to stabilize at 3.3m bpd through 2025. OPEC+ REMAINS WARY OF TRUMP’S SECOND TERM OPEC+ in its latest meeting delayed the phased return of 2.2m bpd of supply from January to April and extended some cuts through 2026. While these measures are expected to slightly narrow the surplus production in 2025, continued output growth from non-OPEC+ will weigh on prices. US oil production has surged by 11% between 2022 and 2024 to 21.6m bpd, eroding OPEC+ market share to its record low of 48% in 2024 from 55% in 2016 when the group was formed. OPEC+ fears a further rise in US output under Trump, which could diminish its ability to sustain prices. The extended cuts of OPEC+ in 2025 risk further declines in its market share. Prolonged low prices will shrink OPEC+ producers' oil revenues and increase the risk of disagreements within the cartel. Disagreements will result in OPEC members supplying more crude in breach of their production cuts. CHINA SHIFTING AWAY FROM CRUDE WITH WIDESPREAD EV & LNG TRUCK ADOPTION Deflationary pressures, persistent property market crisis and a rapid shift to EVs & LNG trucks are dampening crude demand in China, the world’s largest crude importer. It has been the key driver of global demand growth for two decades. According to China National Petroleum Corporation’s Economic and Technological Research Institute (ETRI), Chinese oil demand is projected to peak at 770 million tonnes in 2025. This is driven by growing adoption of EV, LNG trucks, and high-speed rail. Sluggish oil demand in China has led the EIA, IEA, and OPEC to lower their global oil demand forecasts several times. In December, OPEC revised its 2024 forecast downward for the fifth consecutive time. HYPOTHETICAL TRADE SETUP Rising non-OPEC+ production & tepid demand are expected to amplify an oversupplied oil market in 2025, putting downward pressure on prices. Donald Trump’s energy policies are likely to exacerbate this imbalance further widening the gap between supply and demand. Portfolio Managers and Traders can express this bearish view using CME Micro WTI Crude Oil Futures. CME Micro WTI Crude Oil Futures offer the same exposure to crude oil price movements as standard WTI futures, but at 1/10th the contract size, making them a more accessible and flexible option for traders, enabling more granular hedging. This paper posits a short position in CME Micro WTI Crude Oil Futures expiring in March 2025 (MCLH2025) with the following trade setup: • Entry: 70.50/barrel • Target: 65.70/barrel • Stop: 72.00/barrel • P&L at Target (per lot): +480 ((70.50 – 65.70) x 100) • P&L at Stop (per lot): -150 ((70.50 – 72.00) x 100) • Reward-to-Risk Ratio: 3.2x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme . DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. 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NYMEX:MCLH2025Short
by mintdotfinance